Veterans and Consumers Fair Credit Act
- Sponsor
- Rep. Grothman, Glenn [R-WI-6]
- Committees
- Financial Services Committee (primary)
- Last action
- Sep 16, 2026
Bottom line
This bill expands military consumer credit protections, including a 36% interest rate cap, to the general public, aiming to prevent predatory lending practices for all Americans.
What it actually does
This bill extends the consumer credit protections currently provided to active-duty military members and their dependents under the Military Lending Act (MLA) to all consumers nationwide. It primarily achieves this by applying the MLA's 36% Military Annual Percentage Rate (MAPR) cap, which includes most fees, to a broader range of consumer credit products, with specific exceptions for residential mortgages, car loans, and loans from Federal credit unions. The bill also mandates the Bureau of Consumer Financial Protection (CFPB) to issue implementing rules consistent with the MLA.
Proponents argue
Supporters argue this bill protects vulnerable consumers from predatory lending by extending proven safeguards currently enjoyed by military families, ensuring fair access to credit and preventing debt traps. They contend that if these protections are effective for service members, they should be available to all citizens facing similar financial exploitation.
Opponents contend
Opponents may argue that extending these protections broadly could restrict access to credit for some consumers, particularly those with lower credit scores, potentially pushing them towards unregulated lenders or leaving them without options for necessary funds. They might also raise concerns about the economic impact on the consumer lending industry.
The bill is concise, making it accessible for a quick read, but its implications require understanding existing financial regulations, particularly the Military Lending Act.
Section 2(a), adding Section 140B(a) to the Truth in Lending Act
Universal Application of Military Lending Act Protections
This provision makes the core protections of the Military Lending Act (MLA), specifically section 987(b) of title 10, United States Code, applicable to all consumers, not just active-duty military and their dependents. This means that the 36% Military Annual Percentage Rate (MAPR) cap, which includes most fees, will apply to a wider range of consumer credit products, aiming to curb high-cost lending.
Supporters argue
Supporters contend that extending MLA protections is a proven method to curb predatory lending, as it has successfully protected military families from exploitative practices without significantly disrupting the broader credit market. This expansion ensures all Americans benefit from these vital safeguards.
Critics contend
Critics might argue that a blanket extension of the MLA could lead to a contraction of credit availability for subprime borrowers who might otherwise qualify for higher-interest loans, potentially pushing them towards unregulated lenders or leaving them without access to necessary funds.
Tradeoffs
The tension lies between protecting vulnerable consumers from high-cost credit and ensuring continued access to credit for all borrowers, particularly those with less favorable credit histories who might rely on higher-interest options.
Section 2(a), adding Section 140B(a)(2) to the Truth in Lending Act
Exclusions for Specific Loan Types
This provision carves out three specific types of credit from the extended MLA protections: residential mortgages, loans explicitly for car purchases when secured by the car, and loans made by Federal credit unions (which are subject to their existing usury limits). These exceptions aim to prevent disruption to established, generally lower-risk lending markets that already have specific regulatory frameworks.
Section 2(a), adding Section 140B(c) to the Truth in Lending Act
APR Calculation for Open-End Credit
This section specifies how the annual percentage rate (APR) for open-end credit plans (such as credit cards) will be calculated under the new rules. It mandates using TILA's section 107(a)(2) but with adjustments to what counts as a 'finance charge,' aligning with the Secretary of Defense's 2015 final rule for the MLA. It includes an exception for bona fide fees on unsecured credit card accounts (if compliant with TILA section 127(n)), but explicitly excludes credit insurance premiums and fees for credit-related ancillary products from this exception.
Section 2(a), adding Section 140B(d), (e), and (f) to the Truth in Lending Act
State Law Preservation and Enforcement Mechanisms
This provision clarifies that the new federal protections do not preempt stronger state laws, allowing states to offer greater consumer safeguards. It also extends the penalties and remedies from the Military Lending Act (Section 987(f) of title 10) to violations of this new section for all consumers. Furthermore, it explicitly grants State Attorneys General and State regulators the authority to bring civil actions to enforce these new requirements, with a notice requirement to the Bureau of Consumer Financial Protection (CFPB) and prudential regulators.
Section 2(a), adding Section 140B(g) to the Truth in Lending Act
CFPB Rulemaking and Consistency with MLA
This provision directs the Bureau of Consumer Financial Protection (CFPB), in consultation with the Secretary of Defense, to issue rules carrying out this new section within one year of enactment. It explicitly states that these rules must be consistent with the rules issued by the Secretary of Defense for the Military Lending Act and may not provide lesser protection to consumers than that afforded to covered members of the military under the 2015 MLA rules.
The bill incorporates by reference specific sections of the Military Lending Act (10 U.S.C. 987(b) and 987(f)) for application to all consumers, including its limitations on consumer credit and maximum rates of interest, as well as its penalties and remedies.
Section 2(a), adding Section 140B(a)(1) and (e) to the Truth in Lending Act
Why it matters:This is standard legislative practice for efficiency, avoiding redundant text by incorporating existing law by reference. However, it does require external research for full comprehension, making the full impact less immediately apparent.
Case for: Supporters argue that referencing existing law streamlines the legislative process and ensures consistency with a proven regulatory framework. It avoids reinventing the wheel and leverages established legal interpretations, making implementation potentially smoother.
Case against: Critics might contend that this approach makes the bill less transparent and harder for the average citizen or even many policymakers to fully understand without specialized legal research, potentially obscuring the true impact and complexity of the legislation.
Estimated impact: The impact is the extension of the 36% Military Annual Percentage Rate (MAPR) cap, which includes most fees, and associated penalties to virtually all non-exempt consumer credit products nationwide. This is a significant expansion of consumer protection, potentially saving consumers billions annually.